Palestinian Authority President Mahmoud Abbas on Monday said indirect peace talks scheduled to begin this week with Israel will address final-status issues, including borders, Palestinian refugees and Jerusalem, Army Radio reported.

"There is a historic opportunity before Israel, if it withdraws from all Palestinian and Arab lands," said Abbas adding that in exchange, under the Arab peace initiative, Israel would be officially recognized by Arab states.

Prime Minister Benjamin Netanyahu intends to open the indirect talks with the Palestinian Authority this week with a discussion of the security arrangements in the West Bank and of water resources.

A senior official told Haaretz that Netanyahu had recently asked the defense establishment and the National Security Council to elaborate on the so-called eight-points brief, which lists Israel's security demands in terms of a permanent status agreement, as framed by Ehud Olmert's government.

Also Monday, chief Palestinian negotiator Saeb Erekat told Army Radio that Israel should avoid taking any unilateral steps in East Jerusalem and the West Bank, adding that he felt Israel had no reason to sabotage upcoming talks.

Speaking ahead of the soon-to-be-resumed proximity talks between Israel and the Palestinian Authority, Erekat said the PA would not "tolerate new settlement construction, people being driven out of their homes, and any unilateral steps taken by Israel."

"We have four months for the proximity talks, and there's no need for Israel to disrupt those talks with unilateral steps," Erekat added.

Asked whether a decision by Jerusalem's municipal planning committee to erect a new East Jerusalem neighborhood would lead to a Palestinian withdrawal from the negotiations table, Erekat said: "Why would Israel build now? We want to continue talks, not stop them."

Erekat also refuted recent reports stating there had been a falling out between Abbas and PA Prime Minister Salam Fayyad, saying that those reports were "rumors and illusions that Israel is spreading. Their relationship is very good."

Meannwhile Deputy Prime Minister Dan Meridor said in an interview with Army Radio that upcoming proximity talks were unlikely to succeed, adding that it was "clear to everyone that the real talks are direct, and as soon as we get to them the sooner we can get to the crux of the matter."

"Proximity talks are a peculiar thing. For 16 years almost every government has talked to the Palestinians and suddenly they ask for this," Meridor said, adding he felt indirect talks were "a Palestinian attempt to push the Americans in."

Meridor also said it was "a mistake to think Israel didn't want to push things forward," adding that both sides "were losing from the present situation and need to advance to an agreement."

"These talks don't just represent an Israeli interest, even though we have a clear interest, but a Palestinian as well," Meridor said.

Earlier Monday, Army Radio reported that official documents showed Jerusalem's municipal planning committee would not be discussing any significant construction plans for Jewish housing in East Jerusalem in its upcoming meetings.

Jerusalem officials claimed the lack of discussion regarding East Jerusalem building was an attempt to appease U.S. President Barack Obama's administration in the wake of recent tensions between the allies.

Officials have also said that Israel had also tacitly agreed to halt all East Jerusalem demolitions, with one official saying that it has been "months since houses were demolished in the east of city."